Apple sued over use of name "iPhone" just days after its announced.
Apple Inc. - the computer giant that just dropped the word "computer" from its corporate name - didn't get where it is today by making mistakes.
So you have to wonder what the motive was behind the naming of the long awaited iPhone product it revealed to much fanfare earlier this week.
The new device promises to do everything BlackBerries, PDAs, cell phones and MP3 players do in one small package.
It doesn't hit the market until June, but already there's a problem - it seems Apple doesn't actually own the name.
Cisco System, the most highly valued company in Silicon Valley, has sued Apple for trademark violation, claiming it's had ownership of the term "iPhone" since the year 2000 and has its own product that already bears the name.
The two companies have been in negotiations over the use of the moniker for years and were close to an agreement.
But then Apple guru Steve Jobs stepped out on a stage and into trouble Tuesday, officially announcing the new iPhone to the world, even though the two firms never actually reached a deal.
"We certainly expected that since they had gone ahead and announced a product without receiving permission to use the brand, that meant that the negotiation was concluded," maintains Cisco V.P. Mark Chandler.
If Apple is worried about the potential it might wind up owing millions of dollars in penalties for its actions, it's not showing it. The company has responded to the lawsuit with one word -"silly".
How does it justify such a defence?
Lawyers for the firm claim other companies have been using the "iPhone" designation for years with no problem. And they insist the fact the two products are so vastly different negates any confusion in the marketplace.
The new product is an all-in-one cell phone. The old one uses Voice over Internet Protocol to connect users.
"We believe that Cisco's U.S. trademark registration is tenuous at best," responds spokesperson Natalie Kerris. "Apple's the first company to use the iPhone name for a cell phone. And if Cisco wants to challenge us on it, we're very confident we will prevail."
But analysts aren't so sure. They argue Cisco's current "iPhone" could soon more closely resemble the functions that will be featured in the new Apple creation and that there's plenty of reason to assume consumers could be confused.
"I'd envision that Cisco would be inclined to add cellular functionality to its iPhone," believes network specialist Erik Suppiger. "I would not be surprised to see them add additional memory for supporting whatever media functions you might want, either ... The phones may not overlap right now, but they would over the foreseeable future."
Others are sure Cisco is deliberately launching a legal hand grenade at a long time competitor.
"Cisco is a very, very smart company, and anything they can do to slow Apple out of the gate might give them an advantage at the negotiating table," explains researcher Eve Griliches. "Chances are both companies knew this lawsuit was going to happen - the real question is, what's really behind it?"
The answer to that question could come in a courtroom with millions or even billions of dollars at stake. And that could seriously hang up the iPhone.